ATG Reports Second Quarter 2009 Financial Results

Company Grows Revenue and Bookings While More than Doubling Non-GAAP Net Income
CAMBRIDGE, Mass.--(Business Wire)--
Art Technology Group, Inc. (NASDAQ: ARTG), the premier provider of e-Commerce
solutions, today reported financial results for the second quarter ended June
30, 2009.

Revenue for the second quarter of 2009 grew to $44.4 million, a 6% increase over
second quarter 2008 revenue of $41.9 million.

Product license revenue recognized in accordance with United States Generally
Accepted Accounting Principles (GAAP) during the second quarter of 2009
increased 11% to $13.6 million, compared to $12.3 million in the year ago
quarter.

Product license bookings, a non-GAAP measure which the company defines as the
sale of perpetual software licenses, grew 6% to $16.6 million for the second
quarter from $15.7 million in the year ago quarter. Approximately 44% of product
license bookings in the second quarter were deferred and will be recognized
ratably.

"ATG delivered another solid quarter with expansion in both revenue and profit,"
stated Bob Burke, ATG`s president and CEO. "Our results serve as evidence that
healthy demand for e-Commerce solutions continued, despite a tough economy. In
fact, many aspects of this economy are forcing companies to invest in e-Commerce
in order to drive revenue at a lower cost."

Net income in accordance with GAAP for the second quarter of 2009 increased to
$4.6 million, or $0.03 per diluted share compared with net income of $348
thousand, or breakeven on a per diluted share basis, in the second quarter of
2008.

Non-GAAP net income increased to $7.9 million for the second quarter of 2009, or
$0.06 per diluted share compared with non-GAAP net income of $3.4 million, or
$0.03 per diluted share for the second quarter of 2008.

Cash flow from operations for the second quarter of 2009 was $5.0 million. At
June 30, 2009, ATG had $71.8 million in cash, cash equivalents, and marketable
securities.

Julie Bradley, ATG`s senior vice president and CFO stated, "Revenue, license
bookings and net income results were at the high end or exceeded our previously
stated guidance ranges. Based on our pipeline, healthy trends in our business
and continued focus on cost containment, we remain optimistic about our ability
to post revenue and earnings growth in the second half of 2009."

Quarterly Conference Call

ATG management will discuss the company`s second quarter 2009 financial results,
recent highlights, and business outlook on its quarterly conference call for
investors at 10:00 a.m. ET today. The conference call will be broadcast live
over the Internet. Investors interested in listening to the webcast should log
on to the "Investors" section of the ATG website, www.atg.com. The live
conference call also can be accessed by dialing (866) 723-3575 (or (706)
634-8872 for international calls) and using conference ID No. 18199601. A replay
of the call will be available on the company`s website later in the day.

About ATG

A trusted, global specialist in e-commerce, ATG (Art Technology Group, Inc.,
NASDAQ: ARTG) has spent the last decade focused on helping the world's premier
brands maximize the success of their online businesses. The ATG Commerce
application suite is the top-rated platform by industry analysts for powering
highly personalized, efficient and effective e-commerce sites. The company's
platform-neutral e-commerce optimization services can be easily added to any Web
site to increase conversions and reduce abandonment. These services include ATG
Recommendations and eStara Connections. The company is headquartered in
Cambridge, Massachusetts, with additional locations throughout North America and
Europe For more information, please visit http://www.atg.com.

© 2009 Art Technology Group, Inc. ATG and Art Technology Group are registered
trademarks of Art Technology Group, Inc. All other product names, service marks,
and trademarks mentioned herein are trademarks of their respective owners.

ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(UNAUDITED)

June 30, March 31, December 31, June 30,
2009 2009 2008 2008
ASSETS

Current Assets:
Cash, cash equivalents and marketable securities (including restricted cash of $0 at June 30, 2009, $1,300 at March 31, 2009, $1,669 at December 31, 2008 and June 30, 2008) $ 71,335 $ 67,475 $ 60,983 $ 50,573
Accounts receivable, net 39,155 30,582 35,109 40,501
Deferred costs, current 876 822 924 777
Deferred tax assets 560 560 560 -
Prepaid expenses and other current assets 3,266 3,563 3,814 3,705

Total current assets 115,192 103,002 101,390 95,556

Property and equipment, net 10,500 10,069 10,098 8,611
Intangible assets, net 5,917 6,843 7,770 9,938
Deferred costs, less current portion 1,884 1,852 1,984 2,331
Marketable securities (including restricted cash of $419 as of June 30, 2009, March 31, 2009, December 31, 2008 and June 30, 2008) 419 419 419 2,124
Other assets 1,457 1,355 1,423 1,733
Goodwill 65,683 65,683 65,683 67,787

Total long-term assets 85,860 86,221 87,377 92,524

Total assets $ 201,052 $ 189,223 $ 188,767 $ 188,080

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable $ 5,229 $ 4,265 $ 2,958 $ 3,823
Accrued expenses 15,398 15,494 18,875 19,182
Deferred revenue, current portion 41,765 37,899 38,782 42,610
Accrued restructuring - - 146 646

Total current liabilities 62,392 57,658 60,761 66,261

Other liabilities 1,775 1,775 1,775 498
Deferred revenue, less current portion 13,046 14,170 15,285 11,558

Total long-term liabilities 14,821 15,945 17,060 12,056

Stockholders' equity 123,839 115,620 110,946 109,763

Total liabilities and stockholders' equity $ 201,052 $ 189,223 $ 188,767 $ 188,080

ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(UNAUDITED)

Three months ended Six months ended
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
Revenue:
Product licenses $ 13,576 $ 12,930 $ 12,300 $ 26,506 $ 21,557
Recurring services 24,028 23,103 22,946 47,131 43,889
Professional and education services 6,823 5,878 6,674 12,701 13,004

Total revenue 44,427 41,911 41,920 86,338 78,450

Cost of Revenue:
Product licenses 457 390 519 847 906
Recurring services 8,722 8,897 9,241 17,619 16,847
Professional and education services 5,505 5,302 6,495 10,807 13,409

Total cost of revenue 14,684 14,589 16,255 29,273 31,162

Gross Profit 29,743 27,322 25,665 57,065 47,288

Operating Expenses:
Research and development 7,663 7,470 7,373 15,133 14,394
Sales and marketing 12,541 12,288 13,156 24,829 24,693
General and administrative 4,670 4,489 4,863 9,159 9,192

Total operating expenses 24,874 24,247 25,392 49,121 48,279

Income (loss) from operations 4,869 3,075 273 7,944 (991 )
Interest and other income, net 339 211 240 550 868

Income (loss) before provision for income taxes 5,208 3,286 513 8,494 (123 )
Provision for income taxes 588 312 165 900 371
Net income (loss) $ 4,620 $ 2,974 $ 348 $ 7,594 $ (494 )

Basic net income (loss) per share $ 0.04 $ 0.02 $ 0.00 $ 0.06 $ (0.00 )

Diluted net income (loss) per share $ 0.03 $ 0.02 $ 0.00 $ 0.06 $ (0.00 )

Basic weighted average common shares outstanding 126,877 126,113 128,805 126,497 128,620

Diluted weighted average common shares outstanding 133,111 129,368 135,010 131,242 128,620

Art Technology Group, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)

Three months ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008

Cash Flows from Operating Activities:
Net income (loss) $ 4,620 $ 2,974 $ 348 $ 7,594 $ (494 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 2,417 2,263 2,191 4,680 4,219
Non-cash stock-based compensation expense 2,402 1,955 2,001 4,357 3,831
Net changes in operating assets and liabilities (4,481 ) 899 2,738 (3,582 ) 6,817

Net cash provided by operating activities 4,958 8,091 7,278 13,049 14,373

Cash Flows from Investing Activities:
Purchases of marketable securities (6,926 ) (1,929 ) (5,417 ) (8,855 ) (14,613 )
Maturities of marketable securities 4,082 5,243 6,550 9,325 17,600
Purchases of property and equipment (2,312 ) (1,329 ) (1,017 ) (3,641 ) (3,392 )
Collateralization of letters of credit - - - - (2,088 )
Payment of acquisition costs, net of cash acquired - - 1,151 - (9,522 )

Net cash (used in) provided by in investing activities (5,156 ) 1,985 1,267 (3,171 ) (12,015 )

Cash Flows from Financing Activities:
Proceeds from exercise of stock options 364 149 148 513 657
Proceeds from employee stock purchase plan 276 242 266 518 516
Repurchase of common stock - - (1,479 ) - (1,479 )
Payment of employee restricted stock tax withholdings (445 ) (383 ) (476 ) (828 ) (476 )

Net cash provided by (used in) financing activities 195 8 (1,541 ) 203 (782 )

Effect of foreign exchange rate changes on cash and cash equivalents 1,018 (276 ) (84 ) 742 102
Net increase in cash and cash equivalents 1,015 9,808 6,920 10,823 1,678
Cash and cash equivalents, beginning of period 57,221 47,413 29,177 47,413 34,419

Cash and cash equivalents, end of period $ 58,236 $ 57,221 36,097 $ 58,236 $ 36,097

ART TECHNOLOGY GROUP, INC.
STATEMENTS OF OPERATIONS DATA
(In thousands)
(UNAUDITED)

Three months ended Six months ended
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
Equity-Related Compensation:

Cost of revenue $ 488 $ 410 $ 401 $ 898 $ 745
Research and development 432 370 332 802 737
Sales and marketing 609 512 608 1,121 1,178
General and administrative 873 663 660 1,536 1,171

Total equity-related compensation $ 2,402 $ 1,955 $ 2,001 $ 4,357 $ 3,831

Depreciation and Amortization:

Depreciation
Cost of revenue $ 913 $ 815 $ 686 $ 1,728 $ 1,237
Research and development 301 269 223 570 436
Sales and marketing 192 176 131 368 259
General and administrative 85 77 68 162 147
$ 1,491 $ 1,337 $ 1,108 $ 2,828 $ 2,079

Amortization
Cost of revenue $ 399 $ 400 $ 406 799 866
Research and development - - 81 - 81
Sales and marketing 527 526 596 1,053 1,193
General and administrative - - - - -
$ 926 $ 926 $ 1,083 $ 1,852 $ 2,140

Total depreciation and amortization $ 2,417 $ 2,263 $ 2,191 $ 4,680 $ 4,219

Capital Expenditures:

Purchases of property and equipment $ 2,312 $ 1,329 $ 1,017 $ 3,641 $ 3,392

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In thousands, except per share data)
(UNAUDITED)

Three months ended, Six months ended
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008

Net income (loss) GAAP $ 4,620 $ 2,974 $ 348 $ 7,594 $ (494 )

Amortization of acquired intangibles 926 926 1,083 1,852 2,140
Equity-related compensation 2,402 1,955 2,001 4,357 3,831

Net income (non-GAAP) $ 7,948 $ 5,855 $ 3,432 $ 13,803 $ 5,477

Net income (non-GAAP) per share:

Basic $ 0.06 $ 0.05 $ 0.03 $ 0.11 $ 0.04
Diluted $ 0.06 $ 0.05 $ 0.03 $ 0.11 $ 0.04

Shares used in per share calculations:

Basic 126,877 126,113 128,805 126,497 128,620
Diluted 133,111 129,368 135,010 131,242 134,551

Reconciliation of Product License Bookings
(In thousands)
(UNAUDITED)

Three months ended, Six months ended
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008

Product license bookings $ 16,612 $ 12,348 $ 15,693 $ 28,960 $ 27,141

Increase in product license deferred revenue (7,292 ) (4,686 ) (9,670 ) (11,978 ) (15,363 )

Product license deferred revenue recognized 4,256 5,268 6,277 9,524 9,779

Product license revenue $ 13,576 $ 12,930 $ 12,300 $ 26,506 $ 21,557

Use of Non-GAAP Financial Measures

ATG is providing the non-GAAP historical and forward-looking financial measures
presented above as the company believes that these figures are helpful in
allowing individuals to better assess the ongoing nature of ATG's core
operations. A "non-GAAP financial measure" is a numerical measure of a company's
historical or future financial performance that excludes amounts that are
included in the most directly comparable measure calculated and presented in the
GAAP statement of operations.

Net income (non-GAAP) and net income per share (non-GAAP), as we present them in
the financial data included in this press release, have been normalized to
excludethe net effects of amortization of acquired intangible assets,
equity-related compensation, and related tax adjustments. Management believes
that these normalized non-GAAP financial measures excluding these items better
reflect the company`s operating performance as these non-GAAP figures exclude
the effects of non-recurring or non-cash expenses. Management believes that
these charges are not necessarily representative of underlying trends in the
company's performance and their exclusion provides investors with additional
information to compare the company's results over multiple periods.

ATG considers "product license bookings," a non-GAAP financial measure which the
company defines as product license revenue recognized plus net change in
deferred license revenue during any given period, to be an important indicator
of growth in its software license business, as its business increasingly evolves
toward a recurring, ratable revenue model.

The company uses these non-GAAP financial measures internally to focus
management on period-to-period changes in the company's core business.
Therefore, the company believes that this information is meaningful in addition
to the information contained in the GAAP presentation of financial information.
The presentation of this additional non-GAAP financial information is not
intended to be considered in isolation or as a substitute for the financial
information prepared and presented in accordance with GAAP.

In accordance with the requirements of Regulation G issued by the Securities and
Exchange Commission, the tables above present the most directly comparable GAAP
financial measure and reconcile non-GAAP net income and product license bookings
to the comparable GAAP measures.

ATG Statement Under Private Securities Litigation Reform Act

This press release contains forward-looking statements about the company`s
estimated revenue and earnings.These statements involve known and unknown risks
and uncertainties that may cause ATG`s actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements.These risks include the effect of weakened or
weakening economic conditions or perceived conditions on the level of spending
by customers and prospective customers for ATG`s software and services;
financial and other effects of cost control measures; quarterly fluctuations in
ATG`s revenues or other operating results; customization and deployment delays
or errors associated with ATG`s products; the risk of longer sales cycles for
ATG`s products and ATG`s ability to conclude sales based on purchasing decisions
that are delayed; satisfaction levels of customers regarding the implementation
and performance of ATG`s products; ATG`s need to maintain, enhance, and leverage
business relationships with resellers and other parties who may be affected by
changes in the economic climate; ATG`s ability to attract and maintain qualified
executives and other personnel and to motivate employees; activities by ATG and
others related to the protection of intellectual property; potential adverse
financial and other effects of litigation (including intellectual property
infringement claims) and the release of competitive products and other
activities by competitors.Further details on these risks are set forth in ATG`s
filings with the Securities and Exchange Commission (SEC), including the
company`s annual report on Form 10-K for the period ended December 31, 2008 and
its quarterly report on Form 10-Q for the period ended March 31, 2009, as filed
with the SEC.These filings are available free of charge on a website maintained
by the SEC at http://www.sec.gov.

Art Technology Group, Inc.
Kim Maxwell, 617-386-1006
Director, Investor Relations
kmaxwell@atg.com

Copyright Business Wire 2009

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